Ramon Navaratnam, who chairs the Asian Strategy and Leadership Institute Centre for Public Policy Studies, said the country was “stuck” with its large emolument and pensions bill.
“Pensions cannot be reduced and you cannot retrench civil servants. So, we are stuck with this,” the former Treasury deputy secretary-general told FMT.
Under the 2021 budget tabled by Finance Minister Tengku Zafrul Aziz on Friday, civil servants emoluments are estimated to be RM84.5 billion, with pensions coming up to 11.7% of the amount.
The government’s wage bill was RM82.61 billion in 2020 and RM80.53 billion in 2019.
“It all goes back to ‘Ops Isi Penuh’ and it will only continue to grow,” he said, referring to “Ops Isi Penuh”, the government’s public service recruitment programme in the 1980s.
Shankaran Nambiar of the Malaysian Institute of Economic Research (MIER) was more hopeful, however, suggesting that even if nothing could be done with respect to existing commitments, the government should look into downsizing its wage bill for the long term.
“Emoluments alone constitute 36% of the operating expenditure and it has increased by RM1.9 billion from 2020,” he told FMT.
Shankaran said while it was good that the budget provided support, such as cash handouts for disadvantaged groups, it “is lean on support for small- and medium-sized enterprises (SMEs) minus those in the tourism sector or have plans for digitalisation”.
Meanwhile, Centre for Market Education Malaysia CEO Carmelo Ferlito told FMT that the large allocations for emoluments and pensions were really not surprising anymore.
“This is more or less in line with previous years,” he said.
He added there could also be a political strategy to the government’s provision of other incentives for civil servants.
Speaking on the overall impact of the budget, Ferlito said, the government should have placed a greater emphasis on initiatives that could have a more lasting effect on the economy without the need to spend more money.
“I do not see any real economic recovery strategy in the allocation of the annual budget. While including some good ad-hoc and targeted aids, the budget lacks substantial initiatives to boost the economy,” he said.